Owner Financing Mortgage Contract Template for Indonesia

The Owner Financing Mortgage Contract is a crucial legal instrument used in Indonesian property transactions where traditional bank financing is either not preferred or not available. This document is particularly relevant when sellers wish to finance the buyer's purchase directly, creating a mortgage arrangement that complies with Indonesian property and financing laws. The agreement must be executed before a Land Deed Official (PPAT) and requires registration with the National Land Office (BPN). It includes detailed provisions for the property transfer, payment terms, security arrangements, and enforcement mechanisms, all structured to comply with Indonesian Civil Code and relevant property regulations. The document is especially useful for private property sales, commercial real estate transactions, and situations where parties prefer direct financing arrangements over traditional banking channels.

1. Parties: Identification of the property seller (lender) and buyer (borrower), including their full legal names, addresses, and any relevant registration numbers

2. Background: Context of the transaction, including the seller's ownership of the property and the buyer's intention to purchase through owner financing

3. Definitions: Definitions of key terms used throughout the agreement

4. Property Details: Complete legal description of the property, including certificate numbers, boundaries, and registered encumbrances

5. Purchase Price and Financing Terms: Total purchase price, down payment, loan amount, interest rate, payment schedule, and term of the loan

6. Security Arrangements: Details of the mortgage rights (Hak Tanggungan) over the property and registration requirements

7. Payment Terms: Specific provisions regarding payment methods, due dates, late payments, and prepayment options

8. Representations and Warranties: Statements of fact and guarantees from both parties regarding their capacity, property condition, and title

9. Covenants: Ongoing obligations of both parties, including property maintenance, insurance, and tax responsibilities

10. Default and Remedies: Events constituting default and the rights and remedies of each party in case of default

11. Transfer and Assignment: Provisions regarding the ability to transfer or assign rights under the agreement

12. Governing Law and Dispute Resolution: Specification of Indonesian law as governing law and methods for resolving disputes

13. Notices: Methods and addresses for formal communications between parties

14. Execution: Signature blocks and notarization requirements